10 July 2012

The legal route was opened Monday for
Singapore's last Housing and Urban Development Company (HUDC) estate to take
its first step down the privatisation path.

The sprawling Braddell View estate
had been built in two stages, in 1977 and 1980. As a result of the different
land leases, it was difficult for the estate to privatise because the HUDC
Housing Estates Act requires the cost of doing so to be borne equally by all
918 households.

But, following Parliament's nod to a
change in the Act, the residents can 'decide how best to apportion the cost among
themselves, taking into account the potential benefits of privatisation', said
Minister of State (National Development) Lee Yi Shyan during the debate on the
change.

He said having the shorter lease
brought up to par with the longer one, by way of a top-up premium, is the most
feasible option out of three the Housing Board considered.

The exact amount, however, would be
decided by the Government's Chief Valuer, who will take into account the state
of the property and recently transacted prices, added Mr Lee.

Freehold condominium development Asia
Gardens is up for sale again, and owners are setting their sights a little
lower by asking for between $273.2 million and $300.3 million, compared with
the $302.6 million to $307.7 million they wanted in January.

The property, located at Everton
Road, has an allowable gross floor area of 201,765 sq ft based on a plot ratio
of 2.8, which works out to a cost of about $1,354 to $1,488 per sq ft per plot
ratio (psf ppr). The previous indicative price works out to $1,500 to $1,525
psf ppr.

The 84-unit Asia Gardens, zoned for
residential use, lies within an area which is undergoing major rejuvenation,
with the proposed transformation of the former Tanjong Pagar KTM Station,
Tanjong Pagar Container Terminal and the redevelopment of several high-rise
apartments.

The marketing agent said that no
development charge is payable for the site. The tender for Asia Gardens will
close at 3pm on 31 July.

Demand in Singapore's office market
has been a lot more resilient than earlier thought, with positive net office
absorption of about 473,200 sq ft in the second quarter, taking the first-half
tally to about 1.06 million sq ft, says a consultancy.

Vacancy rates also dropped across all
submarkets and building grades in 2Q from the preceding quarter. Looking ahead,
however, it expects the central locations (both Core CBD and Fringe CBD) to
experience rising vacancy rates as a high volume of second-hand space will come
onto the market as occupiers move to newer buildings. An example will be DBS,
which will move from DBS Building on Shenton Way to Marina Bay Financial Centre
Tower 3.

So far, Grade A rents have fallen
more from the 3Q 2011 peak compared with Grade B rents, which has reduced their
gap. However, the picture could change. Grade B offices are likely to be under
greater rental pressure towards year-end and next year, due to more secondary
supply - an additional 1.2 million sq ft of second-hand space is expected to be
released in the next 18 months - as well as some shadow space, which refers to
excess space made available for subletting or reassignment by existing tenants.
Grade A rental declines, on the other hand, are expected to ease.

The average gross monthly rental
value for Grade A office spaces - which covers best-in-class buildings in
Raffles Place, Marina Bay, Marina Centre and Shenton Way - slipped 4.7 per cent
quarter-on-quarter to $10.10 per sq ft in 2Q. The consultancy expects the
average rental to slide by year-end to $9.30/9.40 psf, which would translate to
a roughly 15 per cent full-year drop.

The average monthly rental rate for
Grade B offices - which are in places such as Raffles Place, Shenton Way,
Tanjong Pagar, City Hall, Orchard Road, Alexandra and HarbourFront - stood at
$7.21 psf, down 0.6 per cent from 1Q. The relatively stable Grade B rent is
largely due to higher occupancy levels. By contrast, the Grade A segment has
had to absorb a high volume of vacant space in newly completed developments,
which has created a highly competitive leasing market and pressurised rents.

Some 1.37 million sq ft of office
space is slated for completion this year, most of it from Marina Bay Financial
Centre Tower 3, which was completed in March. Next year, new supply completion
is slated to rise to 2.8 million sq ft (major projects include Asia Square
Tower 2 and Ho Bee's The Metropolis in Buona Vista) before easing to 1.7
million sq ft in 2014, when CapitaGreen (on the former Market Street Car Park
site) and 5 Shenton Way (on the former UIC Building location) are completed.

Vacancy rate for Grade A offices fell
from 12.9 per cent at the end-Q1 to 12.2 per cent at end-Q2, but this was still
much higher than the 8.5 per cent at end-Q2 2011. The property consultancy
estimates islandwide office vacancy at 6.4 per cent at end-Q2, down from 7.3
per cent at end-Q1 but higher than Q2 2011's 6 per cent.

Those workaholics who want to devote
all their waking hours to getting a business up and running might find a new
concept being tried by business park giant Ascendas right up their street.

The idea is a twist on the small
office home office (Soho) concept, where a home can double as an office.

Ascendas has plans to turn the idea
around to come up with the 'work office home office' (Woho) at its new project
at Fusionopolis.

Essentially, the project is a
business park with added flexibility in that it allows offices to double as
homes. Each 'module' can accommodate two people.

The 'work office home office' is
still in the design stage so it is not known if all modules will come equipped
with bathrooms, for example. But there will be some flexibility for the tenants
to customise their space.

For example, an entrepreneur who has
set up a company would rent a module where he could also live. As the business
expands and staff are taken on, neighbouring modules can be rented.

The tender for this project for Phase
Five of Fusionopolis closed in March. JTC announced Monday that it has awarded
the tender to Ascendas at the tendered price of $172.8 million. The facility
will cater to multiple tenants operating in the media, electronics and
engineering sectors.